CHARLESTON, W.Va. — Alpha Natural Resources' proposed $7.1 billion buyout of struggling rival Massey Energy Co. would create a global power built on exporting U.S. coal for steelmakers, Alpha's chief executive said Monday.
Combined, the pair should produce 27 million tons a year of higher-priced metallurgical coal by 2013 and start adding to profits next year, Kevin Crutchfield said during a conference call with analysts.
"We'll become a true global leader. We'll be a leading supplier of metallurgical coal globally and in the U.S.," Crutchfield said, adding that Alpha would have among the world's largest and highest-quality reserves of coal used in making steel.
No antitrust barriers?
Demand has pushed up U.S. coal exports nearly 47 percent to 60.8 million tons through the first nine months of the year. The biggest growth occurred to fast-growing Asian companies. While government figures don't break down exports by type of coal, metallurgical coal tends to account for the bulk of U.S. exports, which come almost entirely from Eastern mines.
"We continue to believe that the world is going to experience a persistent structural undersupply of high-quality metallurgical coal," Crutchfield said.
Crutchfield doesn't think the deal will run into antitrust hurdles. And he hinted that Massey's legal matters from an April mine explosion that killed 29 workers could be resolved soon.
The combined company would have sales of about 131 million tons annually and control 29 percent of the U.S. supply of metallurgical coal.
Moody's Investors Service said it was reviewing Alpha's debt ratings for a possible downgrade. Alpha expects to have $2.9 billion in debt on its balance sheet if the deal goes through.
Replacing safety program
Crutchfield and his top deputies would run the combined company. Massey's board would be eliminated. Alpha also would replace Massey's much-maligned safety program with its own approach. Massey's safety record has been questioned for years and has faced renewed skepticism after the explosion that killed 29 miners at its Upper Big Branch mine in April. The disaster is the deadliest at a U.S. coal mine since 1970 and the target of civil and criminal inquiries.
Crutchfield indicated that Alpha intends to resolve the matter quickly. Discussions with regulators started as soon as the deal was announced, he said.
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